Long ago, an M.Tech curriculum consisted of 3 Semesters. Two of them involved course work and the last one involved working in an industry environment.
Even the B. Tech. programme involved summer projects in the second and the third year.
Over the years the student community has grown exponentially. The companies find it hard to accommodate students in such large numbers as useful projects in such large numbers is a problem. Moreover, the students complain about lack of seriousness of the company for the summer project.
The other option is to work with an project with a research bend. Working with literature, addressing a problem of current interest would help a student to work towards Ph.D.
It is moot point to consider: whether a post-graduate student (especially a Computer Science Student) is doing justice to his education by working with an project in a company or working with an academic project.
If one wonders what can come out of an M.Tech. Project, consider Google's page rank technology which was an MS project.
My feeling is that in the absence of a worthwhile project from the industry, a project of academic nature will add a lot more value to the students.